What Is Greenwashing? Dividend.comRead More
Impact Investing Forum 2022
London. April 28-29, 2022.
The best way to avoid greenwashing is to conduct adequate due diligence on the funds and stocks you own. In particular, you should read each fund’s prospectus to understand its ESG criteria and how it meets those criteria over time. You can also look at each fund’s holdings to see if they match your expectations.
For example, the Calvert Equity Fund (CSIEX) prospectus includes key ESG metrics that go above and beyond. The fund managers vote proxies on climate change and gender pay equity, and selectively invest in companies with lower carbon emissions, toxic emissions, and tobacco exposure than the Russell 1000 Growth index.
On the other hand, the iShares ESG Aware MSCI USA ETF (ESGU) says it avoids businesses involved with civilian firearms, controversial weapons, tobacco, thermal coal, and oil sands. However, the company’s portfolio includes many large oil and gas companies that don’t fall under the exclusionary criteria, a problematic fact for some investors.
Many individual companies are also including ESG reporting in their 10K or 10Q SEC filings. These disclosures may be especially valuable for oil and gas companies transitioning to renewable energy insomuch as you can see if ESG investments are accelerating. In fact, you can use that information as a basis to build your ESG portfolio.